Three Things We’ve Learned About Emerging eCommerce Markets
As global eCommerce players like Alibaba and Rocket Internet have made headlines in recent weeks, there has been much focus on how eCommerce is emerging around the globe. While a lot of the media coverage has looked at the specific operations of these two players, it’s important to note some of the trends that are powering growth in emerging eCommerce markets. Below are two themes we discuss in our research — and one more that keeps rearing its head in the media:
- If traditional retail stores don’t meet rising consumer demand, eCommerce will fill the void. In some emerging markets, the nature of the traditional retail market left consumers particularly ripe for eCommerce. In markets like China and India — which have highly fragmented traditional retail landscapes and few retailers with nationwide footprints — consumers in smaller cities have traditionally had little access to global brands. This situation leaves an opportunity wide open as the growing number of middle-class consumers seek out access to a greater variety of products. Even as eCommerce revenues have soared across Asia, few traditional retailers have been quick to embrace the new medium. Today, eCommerce in many countries across the region is almost completely dominated by Web-only players.
- Consumers in smaller cities and rural areas are emerging as a massive digital force. Given that eCommerce opened the door to consumers seeking out greater access to brands, it’s not surprising that a large percentage of eCommerce growth is coming from the traditionally underserved consumers in smaller cities and towns. This trend has well documented across every BRIC market — India’s Snapdeal sees half of its orders from consumers in tier 2 and tier 3 cities, for example, while Russia’s Sapato (acquired by Ozon) registered 65% of its sales outside of Moscow and St. Petersburg. Leading eCommerce players in Brazil have seen similar growing demand from consumers outside of the major cities. eCommerce players have been busy building our their logistics networks to serve these consumers – look to see more brands directly courting this mobile-centric group of online shoppers.
China's smaller cities are helping drive eCommerce growth
- Catastrophic events around the globe may provide short-term boosts to eCommerce. Finally, when it comes to trends that are more hype than reality, the past year has seen an unprecedented number of stories suggesting that eCommerce is a direct beneficiary of different catastrophic events. From pollution in China to protests in Thailand, and from unrest in the Middle East to the Ebola outbreak in Africa, all have been cited as factors that help boost eCommerce sales given consumers’ reluctance to leave their homes. Thankfully, most of these are not long-term phenomena and are thus unlikely to be major revenue drivers for eCommerce organizations. However, don’t be surprised to see an ongoing eCommerce spin on global news stories.
Our upcoming research over the next few weeks will feature some key eCommerce trends in both China and Brazil — stay tuned!